During a Recession,lending Typically Declines Because

question 110

Multiple Choice

During a recession,lending typically declines because:

• A) banks need to hold less as a cushion for themselves.
• B) asset prices fall and therefore the net worth of firms declines as well,making them look riskier to banks.
• C) there are fewer collateral shocks.
• D) there is more demand for investment funding.

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Definitions:

Amazon River

One of the largest rivers in the world by discharge volume of water, located in South America and playing a crucial role in the Amazon rainforest ecosystem.

Mexico

A country located in the southern part of North America, known for its rich cultural heritage, history, and diverse landscapes.

Luxury Goods

High-end products or services that are not essential but are desired for their quality, status, or aesthetic appeal.

European Exploration

The period during which European powers explored, and sometimes conquered, parts of Africa, the Americas, Asia, and Oceania from the late 15th century onwards.